Register as a Sole Trader

If you start working for yourself, you're considered as self-employed even if you've not told HM Revenue and Customs (HMRC). You will run the business as an individual and not as a company, although you can still employ staff.

As a sole trader, you can keep all of your business's profits after you've paid tax on them, and you're personally responsible for any losses your businesses makes.

Responsibilities

As a sole trader your must:

send a Self Assessment tax return each year
pay Income Tax
pay National Insurance
keep records of your finances and expenses
register for VAT if you expect your turnover to be more than £83,000 a year.

* The difference in responsibilities of a sole trader are less administrative than a limited company.

Typical sole trader professions

Painters & Decorators
Makeup artists
Bloggers

Freelancers also tend to be sole traders as there are fewer responsibilities.

Benefits of a sole trader

The benefits of a sole trader are outlined as follows:

any profits you make after taxes have been paid, is yours
you have full control over your business
you work for yourself
less admin/accounting work

Challenges of being a sole trader

if your business is in debt, you as the business owner will be liable
if you don't work, you don't get paid
all responsibilities fall on you unlike an LTD company

Naming your business

Your name can't be exactly the same as another registered company's name, so you will need to search the Companies House register to see if a name has been taken. The name also can't be too similar to another registered name, and the 'limited' or 'Ltd' is kept out of your company name.

You can register your business name as a limited company separately to reserve the name for the future from the following this link.

How to register

Sole traders must register with HM Revenue and Customs, and you'll need:

a National Insurance number

to register for Self-Assessment with HMRC

to trade under your own name or register a business name

Need help registering?

We're currently unable to process sole trader applications at the moment.

This article is a general overview, and we do not offer professional advice. If you need professional advice, please speak to an accountant or business advisor.